Chinese internet giants JD.com and Tencent are to invest US$863m in Vipshop, a leading online discount retailer for brands in the country, in a bid to boost the companies’ respective fashion businesses.
The agreement will see JD.com and Tencent subscribe for newly-issued Class A ordinary shares of Vipshop in the amount of about $259m and $604m respectively, at a purchase price of $65.40 per Class A ordinary share. As a result, JD.com will take a 5.5% stake and Tencent 7%.
Under the terms of the agreements, media and web giant Tencent will grant Vipshop an entry on the interface of Weixin Wallet enabling Vipshop to utilise traffic from Tencent’s Weixin platform. Meanwhile, retail giant JD.com will grant Vipshop entries on both the main page of its mobile app and its Weixin Discovery shopping entry. It will also assist Vipshop in achieving certain GMV targets through its platform.
“The strength of Vipshop’s flash sale and apparel businesses, as well as its outstanding management team, create clear and strong synergies with us,” says JD.com CEO Richard Liu. “This partnership will further extend the strong inroads we have made with female shoppers, and will expand the breadth and reach of our fashion business. We continue to add the top-notch partners to complement JD.com’s core strengths, ensuring that JD and our partners provide the best customer experience for every shopping need.”
Martin Lau, president of Tencent Holdings, adds: “We look forward to providing Vipshop with our audiences, marketing solutions, and payment support to help the company provide branded apparel and other product categories to China’s rising middle class. We already see substantial demand from our users to discover, discuss and purchase branded apparel in our applications, and we believe that connecting our users more deeply to products on Vipshop’s platform will enrich their online experiences while benefiting Vipshop.”